PH pushes for another credit rating upgrade

By Prinz P. Magtulis, The Philippine Star

MANILA, Philippines – The Philippines will make its case for another credit rating upgrade in October as it highlights the country’s sound macroeconomic fundamentals capped by a respectable growth in the second quarter.

“We will have meetings with members of the ratings committee to give them the bigger picture of what is really happening here,” said Claro Fernandez, chief of the investor relations office of the Bangko Sentral ng Pilipinas (BSP).

Discussions will involve Philippine officials and representatives from Fitch Ratings, Standard & Poor’s Ratings Services (S&P) and Moody’s Investors Service, Fernandez said.This will take place on the sidelines of the annual meetings of the World Bank Group and the International Monetary Fund from Oct. 12 to 14 in Tokyo, Japan.

“Of course, we are hoping for an upgrade. In fact, we are already starting work for investment grade,” he added.

The country currently enjoys its highest credit rating from Fitch and S&P at one notch below investment grade, while Moody’s places the country two notches behind although with a positive outlook.

Credit rating measures the capacity and willingness of a country to settle its debts. A positive outlook means an upgrade is possible over the next 18 months.

The Aquino administration, which has enjoyed eight positive credit rating actions over the past two years, has been pushing for an investment grade status, which would not only lessen interests paid on our debts, but also open the country to more foreign investments.

“This is for them (credit rating agencies) to have a better appreciation of the Philippines. We want to constantly engage them into a discussion,” Fernandez explained.

Itinerary of the meetings – including the attendees – is still being finalized, he said.

Boosted by an acceleration of government spending and strong exports, the Philippine economy grew by 5.9 percent in the second quarter, bringing the first semester expansion to 6.1 percent. This is slightly better than the five- to six-percent target for the year.

Sought for comment, Moody’s Assistant Vice President Christian de Guzman said in an e-mail the debt watcher has been monitoring the Philippines closely.

“The Philippine rating is monitored on an ongoing basis and we respond to developments as necessary,” he said.

Philip McNicholas, Fitch director for Asia-Pacific said the second quarter growth was “broadly in line” with its expectations and that it will await further data before making an assessment.

“Fitch does not take rating actions based on a single data point,” McNicholas stressed.

S&P representatives declined to comment.

Fernandez said the government is continuing its dialogue and cooperation with the credit raters.